Government borrowing rose to £20.3bn during November, a new monthly record, official figures revealed yesterday. However, economists said that public sector net borrowing had actually been slightly better than expected, with tax receipts higher than analysts had predicted.
The Office for National Statistics said November's borrowing total compared to £15.5bn in the same month of last year, though receipts are up by 3.6 per cent year-on-year. The underlying trend on tax receipts has also improved.
In the pre-Budget report earlier this month, Alistair Darling, the Chancellor, raised his forecast for total borrowing in the 2009/10 financial year to £178bn. Analysts argued yesterday that the latest figures left the Treasury on track to meet that prediction.
"The UK's public finances have deteriorated further in November, but not as badly as the market had feared," said James Knightley, an economist at ING. "Certainly the better labour market data is helping government finances and a return to growth will further help moderate the rate of deterioration."
However, Howard Archer, chief UK and European economist at IHS Global Insight, warned that the continued decline in the state of the UK's public finances would worry international investors.
"There is still a pressing need on whoever is Chancellor after next year's general election to be much more transparent on public spending cut details, and he will also almost certainly have to announce further cuts and tax rises in order to win credibility over the long-term recovery of the UK public finances," Mr Archer said.
"The pre-Budget report left many questions unanswered, and if the next government fails to address them at an early stage, it is likely that the credit agencies and the markets will lose patience, with dire consequences for the UK economy."
The Conservatives were also quick to seize upon the latest borrowing figures, with George Osborne, the shadow Chancellor, accusing the Government of having "no credible plan to get this debt under control".
Mr Osborne said: "In the run-up to Christmas, Gordon Brown is maxing out on the nation's credit card – and doesn't care how we are going to repay these debts in the future."
The November total took borrowing for the financial year as a whole to £106bn, up from £49bn at the same stage last year and well ahead of the total borrowing of £85bn in 2008/09. The month is traditionally a poor one for borrowing figures, with high spending on winter fuel allowances adding to the pressure on the budget deficit.